Bowes Construction, Inc v. South Dakota Department of Transportation

APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA HONORABLE KATHLEEN F. TRANDAHL Judge

The opinion of the court was delivered by: Severson, Justice

CONSIDERED ON BRIEFS ON NOVEMBER 15, 2010

[¶1.] Bowes Construction, Inc., a subcontractor hired to produce aggregate materials for three asphalt paving projects, initiated this breach of contract action against the South Dakota Department of Transportation. Under the subcontracts, Bowes was contractually obligated to produce aggregate materials that would pass the Department's sodium-sulfate-soundness test, and the Department was contractually obligated to accept Bowes' aggregate materials in the absence of a valid basis to reject them. The parties' subcontracts incorporated South Dakota's standard test procedure for the sodium-sulfate-soundness test. Bowes contended that its aggregate materials failed the Department's sodium-sulfate-soundness test because the Department did not follow the standard test procedure. Bowes alleged that the Department therefore rejected its aggregate materials without a valid basis and breached the subcontracts with Bowes. After a bench trial, the trial court entered a judgment in the Department's favor. We affirm.

BACKGROUND

[¶2.] Bowes is a heavy highway construction company located in Brookings, South Dakota. Approximately one-third to one-half of its business is producing aggregate materials. Producing aggregate materials involves procuring projects, selecting a source or "pit," setting up a portable "crusher" at the source, producing the aggregate, and testing the aggregate for quality. In addition to producing the aggregate, Bowes may be responsible for developing and producing the mix design.*fn1

Bowes has produced aggregate materials for the Department for more than thirty years.

The Sodium-Sulfate-Soundness Test

[¶3.] The sodium-sulfate-soundness test is used to determine whether aggregate is suitable for use in asphalt paving projects. The use of aggregate that is too soft will cause roads to prematurely crack, break, ravel, or fall apart. To perform the test, one must first wash and dry the aggregate, separate the aggregate into samples based on gradation,*fn2 and weigh each aggregate sample. A sodium-sulfate solution is then prepared. When used, the solution must have a specific gravity between 1.151 and 1.174, and the temperature must be between sixty-eight and seventy-two degrees Fahrenheit.*fn3 The aggregate samples are covered in one-half inch of the solution for sixteen to eighteen hours. During immersion, the porous aggregate absorbs the solution. After the immersion period, the aggregate samples are removed from the solution. The aggregate samples are placed in a drying oven at 230 degrees Fahrenheit until they achieve constant weight.*fn4 This entire process is repeated five times. After the fifth cycle, the aggregate samples are washed and weighed. A percent loss is calculated for each aggregate sample. South Dakota tolerates a fifteen-percent loss rounded to the nearest whole number. By contrast, some states have sodium-sulfate-soundness-loss limits as low as five percent. Because the absorbed solution crystallizes during the drying cycle and expands during the subsequent soaking cycle, the sodium-sulfate-soundness test measures the durability of the aggregate to freeze and thaw cycles.

[¶4.] Several states utilize the sodium-sulfate-soundness test, but the testing methods vary by state. The American Society for Testing and Materials (ASTM) has published a standard test method for the sodium-sulfate-soundness test known as ASTM C88. SD 220, a modified version of ASTM C88, is the standard test method used by the Department. The most significant difference between ASTM C88 and SD 220 is the containers used during the tests. ASTM C88 requires the use of "baskets made of suitable wire mesh or sieves with suitable openings." SD 220, by contrast, requires the use of "pans."*fn5 The different containers result in other variations between ASTM C88 and SD 220. According to SD 220, after the soaking cycle, the sodium-sulfate solution is poured off the aggregate sample, and the aggregate sample is placed in the drying oven. Because ASTM C88 requires the use of sieves, it is not necessary to pour off the solution. The sieve containing the aggregate sample is removed from the solution and allowed to drain before it is placed in the drying oven.

[¶5.] The Department has performed the sodium-sulfate-soundness test for decades. Howard Schill was primarily responsible for performing the sodium-sulfate-soundness test for the Department from 1966 to 1999. He testified that when the sodium-sulfate solution is poured off the aggregate sample after the soaking cycle, sodium-sulfate crystals remain in the pan. These crystals liquefy when the aggregate sample is placed in the drying oven. Because SD 220 requires the use of pans rather than sieves, this additional liquid does not drain away from the aggregate sample as it would under ASTM C88. Thus, when Schill began working for the Department in 1966, he was taught to place the aggregate sample in the drying oven, allow it to warm, remove it from the drying oven, and pour off any remaining solution. Schill refers to this additional step as the "double pour" or "redrain."

[¶6.] Schill testified that he performed the sodium-sulfate-soundness test with the double pour during his entire tenure with the Department. In 1996, Schill helped the Department develop SD 220. At trial, Schill acknowledged that SD 220 does not require that the sodium-sulfate-soundness test be performed with the double pour. Yet he testified that he intended SD 220's requirement that "the sodium-sulfate solution from the pan . . . be poured off" to include the double pour. In 1999, in order to train his replacement to perform the sodium-sulfate-soundness test, Schill prepared a procedure sheet, which was posted on the wall of the Department's materials-testing laboratory. Although the procedure sheet explained the several steps necessary to conduct the sodium-sulfate-soundness test, the sheet did not include the double pour.

[¶7.] The Department no longer performs the sodium-sulfate-soundness test with the double pour. For a short period of time after Schill left the Department in 1999, Everett Lawver performed the sodium-sulfate-soundness test. Lawver testified that he performed the sodium-sulfate-soundness test without the double pour. The Department subsequently hired Reed Sommers to perform the sodium-sulfate-soundness test. Schill trained Sommers to perform the sodium-sulfate-soundness test with the double pour. But Sommers passed away in 2001, and Brian Hipple replaced him. There is no evidence whether Hipple performed the sodium-sulfate- soundness test with the double pour. In December 2001, Perry Griffith, who had no previous experience performing the sodium-sulfate-soundness test, replaced Hipple. Hipple, not Schill, trained Griffith. Griffith, who was primarily responsible for performing the sodium-sulfate-soundness test for the Department at all times relevant to this lawsuit, has consistently performed the test without the double pour since 2001.

The Highway 37 Project

[¶8.] The Department let bids on an asphalt paving project on Highway 37 in Bon Homme County, South Dakota, in May 2004. Brauer Construction from Sioux City, Iowa, the successful general contractor on the project, selected Bowes to produce the aggregate and mix design for the project. The parties' subcontract incorporated SD 220 and the South Dakota Quality Control/Quality Assurance (QC/QA) program. South Dakota implemented the QC/QA program in the 1990s to build better roads by providing contractors more control and responsibility in the production of aggregate materials. Under the QC/QA program, a contractor must submit a mix design to the Department that will pass the sodium-sulfate-soundness test as set forth in SD 220. Thus, under the parties' subcontract, Bowes was contractually obligated to produce aggregate materials that ...

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